Opportunities for green credit to accelerate growth.

As Vietnam pursues its goal of achieving net-zero emissions by 2050, green credit is gradually shifting from a purely incentive-based lending model to a crucial component of the financial system. Beyond environmental concerns, green credit is increasingly intertwined with long-term growth, competitiveness, and the adaptability of the economy.

In fact, over the past five years, green credit outstanding has increased by an average of 21% per year, significantly higher than the overall credit growth rate of the economy . From only 15 credit institutions recording green loans in 2017, there are now 58 credit institutions participating, reflecting the clear spread of this capital flow within the banking system.

However, green credit still relies primarily on the "self-driven efforts" of commercial banks. Most interest rate incentives, terms, and credit conditions are designed using the banks' own resources, while the long-term capital costs, technological risks, and payback periods of green projects are generally higher than average. This means that although green credit is growing rapidly, it has not yet achieved a breakthrough in scale and coverage.

This situation will change. Resolution No. 68-NQ/TW of the Politburo and Resolution No. 198/2025/QH15 of the National Assembly have laid the foundation for the State to directly participate in supporting green credit through a mechanism of interest rate support at 2% per year. The beneficiaries include not only private enterprises but also business households and individuals implementing green, circular projects or applying environmental, social, and governance (ESG) standards.

Following the Prime Minister's directive, guiding documents are being urgently finalized. In particular, the draft Decree on interest rate support from the state budget for private enterprises, households, and individuals borrowing capital from commercial banks to implement green, circular, and ESG projects (drafted under the leadership of the State Bank of Vietnam) has been reviewed by the Ministry of Justice . This document is expected to be submitted to the Government very soon and will take effect from the beginning of 2026.

With the issuance of this Decree, green credit will for the first time have clear backing from the budget, instead of relying solely on the goodwill and individual strategies of each bank. Public resources, if properly designed, can help share risks, extend capital maturities, and incentivize banks to boldly expand their green credit portfolios.

A significant advantage is that the classification system for green projects has been issued under Decision No. 21/2025/QD-TTg dated July 4, 2025. Having a "common language" to identify green projects helps resolve long-standing bottlenecks, reduce fragmentation in banks' approaches, and create a foundation for more effective support policies.

While opportunities are opening up, the capacity for implementation is a crucial issue: how can green capital truly flow quickly and in the right direction? In reality, interest rate support policies are only effective when seamlessly integrated into the banks' existing credit processes, rather than becoming an additional "procedural layer" that increases the cost of accessing capital for businesses.

If the application requirements are too complex, the evaluation criteria are rigid, or the responsibilities between regulatory agencies are not clearly defined, the policy can easily fall into the trap of being "incentive but difficult to implement." In that case, the flow of green capital is not hampered by the lack of resources, but rather by the very implementation process. Conversely, a simple, transparent, and sufficiently flexible mechanism will help interest rate support policies truly become a catalyst, encouraging banks and businesses to boldly shift towards greener and more sustainable growth models.

Green credit is poised for a breakthrough. Government involvement through budget-funded interest rate subsidies could provide a real boost to this crucial capital flow. However, like many other support policies, success depends not only on determination or the speed of policy issuance, but also on the quality of design and consistency in implementation.

When green capital flows are properly channeled, the benefits extend beyond credit growth and contribute to moving the economy closer to a sustainable development trajectory, where growth, the environment, and long-term efficiency are inseparable goals.

Source: https://daibieunhandan.vn/co-hoi-but-toc-cua-tin-dung-xanh-10400779.html